Long overdue credit to a good man

You have to interact with Bill McBride to understand how modest and gentle a guy he is. I’m not as optimistic as he is… but he’s been right when I have been wrong. Now, maybe that’s because the Fed made him right, but in investing, being right for the wrong reasons beats being wrong for the right reasons.

So, I’d like to give a little thanksgiving for Bill McBride, who has been a voice of insight and sanity during a very confusing time. And I hope he’s right, that the turnaround in housing signals a sustained rebound in the economy. From Business Insider:

I’m not a roaring bull, but looking forward, this is the best shape we’ve been in since ’97 or something.

In 97, I started worrying about what was going to happen when the stock bubble burst. By the time you got to the decent part of the Bush economy 2004-2005, I was so worried about housing I didn’t think much about the economy. Looking forward, this is the best we’ve been since then. We have plenty of problems to work through, but gosh, housing is going to be a tailwind for some time.

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This entry was posted on November 21, 2012 at 2:44 pm and is filed under economy, Good Things.
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10 Responses to “Long overdue credit to a good man”

jo6pacsaid

Sorry but I don’t think so and I would like to be wrong but with the coming Austerity programs this will drive down the economy even further. Wages have been going down for 20yrs and with unions being shoved aside I just don’t see it. I just dropped my retirement health care, they just priced me out and who knows what the grand bargain is but I doubt it helps Main Street. Then there’s that little trade agreement TPP working its way into the citizens of the world life and as we have witnessed around the world from Poland, Baltic States, and Europe Main Street is losing big time. Just saying, I would like to be wrong but greed is winning.

Johnny B.said

This McBride fellow is completely detached from reality if he thinks this is the best shape we’ve been in since ’97 and if he also thinks things are about to get much better. Left-wing economists in this country are nothing more than a circus act intended to be pointed and laughed at.

McBride lists a number of reasons for believing that things are turning around.
— In 1997, he was worried about the formation of a stock bubble. That did in fact burst in 2000, leading to a mild recession in 2001.
— The Bush Administration, not having any real policy to get the economy growing, collaborated with Alan Greenspan to inflate a housing bubble.
— Thus, from 2001-2009, the situation substantially deteriorated. The personal debt accumulation you complain about, as well as the federal debt you complain about started rising during this period. Clinton lowered the federal debt burden, and slowed the rise in personal debt.
— Under Obama, personal debt has fallen, and the deficit burden (see Fig. 2) is coming down from the horrific level that it rose to under Bush.
— Bill is encouraged that housing, which has been the engine for the economy, is stabilizing. This means construction jobs.
— Bill is also encouraged that jobs, which reached their bottom in 2009, have steadily risen for three years. The US jobs crisis has not been anywhere near as bad as other financial crises.
— Bill called the housing bottom and has been consistently correct. He knows his economics and is willing to put his real name and professional reputation on his predictions.

Aside from the fact that you are simply making this up (Schiff, for example, was calling for a housing crash in 2011, while McBride correctly said that housing would improve starting in 2009), what you’re saying is that McBride is as good as professional commentators.

You should read your own links. In the article in which Murphy references, from 2002, he does not call for a housing bubble. He says that “to offset moribund business investment…Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Krugman was stating the obvious. To get growth, someone has to be willing to spend. Businesses were not spending because the consumer was not buying. The government was spending like a drunken sailor, but on activities that have no economic multipliers, so it was not really helping the economy. That leaves the consumer. And they weren’t spending because the Nasdaq bubble had burst and the stock market was sucking. There are ways to get people to spend that do not involve creating bubbles (like spending on infrastructure), but they are not in the power of the Fed to accomplish.

Unfortunately for Murphy, he is unable to read to read a very simple post. As Krugman said about that post (again, it’s linked in Murphy’s piece), ” It wasn’t a piece of policy advocacy, it was just economic analysis.”

Johnny, you keep on making it evident that you have nothing but noise to contribute. And I do not have the time for this.

Following four more comments demonstrating an inability to discuss, I am happy to resolve the problem of our troll in feeling compelled to continue to converse with someone “steeped in partisan and ideological hackery” whose mentor was “Goebbels.”